PAKISTAN NEEDS TRADE MORE THAN AID

NEW US STRATEGY A POSITIVE SIGN-WOULD HELP YIELDING TANGIBLE RESULTS OF FRIENDS OF PAKISTAN MEETING ON APRIL 18--SENATOR LOT

AMANULLAH BASHAR
Mar 30 - Apr 05, 2009

Although the Public and Private sector in general have welcomed the financial and economic support under new US strategy announced by President Barack Obama yet there were feelings that it does not compensate what Pakistan has lost during war on terror on behalf of the United States. Pakistan has cumulatively lost over $35 billion besides precious human lives during war on terror so far.

Senator Gul Mohammad Lot, a front rank PPP leader while welcoming the US policy on Pakistan said that it was for the first time that unlike the US policy statements on Pakistan in the past it was free from any sort of threat giving an impression that America now taking Pakistan positively.

The new strategy announced by President Obama was a good sign and would definitely help yield positive results of the meeting of friends of Pakistan scheduled on April 18 Senator Lot said and added that the friendly behavior of the US and suggestions to the western countries especially the UK and other European countries as well as friends from Middle East would help to recover all financial and economist losses faced by Pakistan.

Senator Gul Mohammed Lot who has a great passion to build and develop a positive image of the country urged all political forces in the country to come forward and take initiatives to give a positive signal that the all the political stakeholders are one and united to steer out Pakistan from economic and financial mess. It is the responsibility of all patriot political forces to help building a positive image of the country.

He said that in the tribal belt of Pakistan especially in Northern area and FATA the majority of the population consists over young people who have the first choice to get a visa and job abroad especially in the Middle East, or a government job in Pakistan and the last one is to go for violence.

In order to curb violence and improve law and order situation, Pakistan is in dire need of economic and financial support to provide jobs and improve lot of the people which is the key to bring stability to this part of the world, Senator Gul Mohammad remarked.

He said that after the US election people in Pakistan were pinning high hopes of positive and friendly gestures from the United States which proved true in the shape of the policy statement given by President Obama.

Senator Gul was of the opinion that it is in the interest of the United States to cure what President Obama described the terrorism as a cancer both for the US as well as Pakistan. However the way out of the issue is to strengthen and improve economic conditions in Pakistan with a view to cope with the menace of extremism and terrorism.

Commenting on the US strategy, Anjum Nisar, President Karachi Chamber of Commerce and Industry (KCCI) while commenting on the new US strategy said "We should not look at everything from negative side" the soft attitude of the US Administration is a good sign yet instead of focusing on aid the US administration facilitate trade from Pakistan which would be a real support to the economy in Pakistan. It is the trade and market access which can help Pakistan economy to grow in the real sense and not the aid.

Economic stability means social and political stability as well as improved law and order situation. If Pakistan allowed access to the US and the EU markets it will help industry to go in business, provide jobs and alleviate poverty. Our students are given entry into US and European universities for higher education that will also help a lot to achieve sustainable economic growth, said Anjum Nisar.

He remarked that at present Pakistan textiles and other projects like sports and surgical goods, leather and leather made ups are subjected to heavy duty at the rate of 10 percent as against 2.5 percent tariff on Bangladesh and other countries.

This treatment towards Pakistan products is no doubt discriminatory on the part of the US government. In fact, Pakistan products deserve duty free market access both in the US Market as well as in the European Union which would be a real socio-economic help on the part of the US government, the KCCI chief remarked.

US TARIFF BARRIERS

American tariffs on Pakistan's leading exports average approximately 10 percent, about four times the average US tariff rate on imports from other countries.

This discrepancy in the tariff structure was pointed out by the US Chamber of Commerce, the US-Pakistan Business Council in a report comprising policy recommendations to Obama administration and members of Congress to provide the views of the US business community on a range of issues impacting the US-Pakistan economic relationship.

Although the United States stresses the importance of economic growth in Pakistan, American trade policy fails to provide increased market access for Pakistani products in the US.

The current global recession is affecting Pakistan's ability to increase its exports and investment inflows. US tariffs on textiles undermine Pakistan's ability to compete fairly in the American market. Pakistan also succumbs to competitors from other developing countries that benefit from US tariff preferences. A reduction in US tariff rate would help Pakistan compete and would allow business to create jobs, increase exports, and provide a major boost to country's economy, the report said.

NONSTOP PIA FLIGHTS FROM LAHORE TO NEW YORK

The US business community also urged the Department of Homeland Security to provide expeditious approval for nonstop flights to the United States from Pakistan.

It is worth mentioning that PIA has requested for nonstop service from Lahore to New York. The Transportation Security Agency (TSA) has assessed the airport in Lahore to verify its compliance with the International Civil aviation Organization security standards, which is necessary for nonstop flights to the United States.

Although the TSA determined in 2008 that the Lahore airport meets the necessary requirements, the Pakistan airline is still waiting for approval from the Department of Homeland Security.

While appreciating the security concerns that need to be considered in approving these flights, the council argued to ask the administration to provide authorization at the earliest as the direct flights from Lahore to New York would facilitate economic growth and increase trade and investment links between the two countries, the recommendations to Obama administration stressed.

RECONSTRUCTION IN AFGHANISTAN

The US-Pakistan Council supported the Reconstruction Opportunity Zones in Afghanistan and the critical border region of Pakistan under a legislation introduced by Sen. Maria Cantwell and Rep. Christopher Van Hollen that would provide incentives for investment in the impoverished areas along the Afghanistan-Pakistan border by allowing certain products produced in this region to enter the United States duty free.

The council urged the administration to explore possibility of a bilateral free trade agreement in which Pakistan is interested.

US EXPORT-IMPORT BANK

The government of Pakistan is encouraging foreign investment in a wide range of energy and infrastructure development projects. Although the US private sector has shown interest in many public and private projects, the difficulty in obtaining financing and risk insurance discourages foreign investment in these sectors.

In recent years, US government financing agencies have played an important role in promoting FDI in Pakistan. The Export-Import Bank (EXIM BANK) has offered short, medium and long term financing for the export of goods and services to Pakistan's public and private sector. Exim has also provided export credit insurance to cover exporters against both political and commercial risk.

The Overseas Private Investment Corporation (OPIC) SINCE 2002 has provided more than $1 billion in financing and insurance for projects in Pakistan, ranging from construction and manufacturing to energy and financial services. Grants provided by the US Trade Development Agency (USTDA) have helped develop Pakistan's renewable energy sector and alleviate the country's growing demand for power.

The American business community urged the US government to increase resources for finance and risk insurance programs through Exim Bank, OPIC and USTDA. Increased funding of these programs not only fosters economic development in Pakistan but facilitates US exports, encourages technology transfer, provides needed investment capital, and allows US companies to manage the risk associated with FDI in Pakistan.

NON-MILITARY AID

The US private sector while appreciating the administration's plan to increase development assistance to Pakistan has suggested that sustained assistance allocating resources to education, health care, infrastructure development poverty alleviation would demonstrate that the US is committed to ensuring Pakistan's long term prosperity.

The business community supports creation of public private capacity building initiative to help Pakistan's population and provide opportunities for US private sector involvement.

PHARMACEUTICAL PRODUCTS

The council also pointed out that pharmaceutical industry facing serious pricing challenges in Pakistan that represent a market access barrier for the US private sector. Several American companies are pulling out or considering pulling out of Pakistan due to stringent government pricing controls, lack of transparency in setting prices and overregulation in pharmaceutical sector. The council said that prices for pharmaceuticals have not been revised since 2001 in Pakistan despite cumulative inflation during this period has been more than 65 percent. The government in Pakistan has considered adjusting prices of pharmaceutical products to compensate products against rupee devaluation or exchange rate fluctuations yet no new policy has been implemented so far.

SPEECH OF US PRESIDENT

President Barack Obama's statement on Pakistan includes a new strategy to triple US economic aid to Pakistan and promises 4,000 additional troops to train Afghan security forces.

President Obama said 'Make no mistake: al Qaeda and its extremist allies are a cancer that risks killing Pakistan from within,' he warned the Pakistani nation. 'Al Qaeda offers the people of Pakistan nothing but destruction. We stand for something different.'

To his own nation, Mr Obama said: 'The American people must understand that this (economic support) is a down payment on our own future.'

The measures he announced for Afghanistan will cause a 60 per cent increase in US military expenses in that country from the current expenditure of about $2 billion a month.

This does not include the economic assistance he promised to Afghanistan and the money needed to eradicate poppy production.

Along with the 17,000 additional combat troops authorised last month Mr Obama said he will send at least 4,000 more this fall to serve as trainers and advisers to an Afghan army expected to double in size over the next two years.

The US president also acknowledged that 'a campaign against extremism will not succeed with bullets or bombs alone' but promised to provide the tools, training and support the Pakistani military needs to root out the terrorists.

Mr Obama, however, warned that this offer was not unconditional as after years of mixed results, the US did not want to provide a 'blank check' any more.

'Pakistan must demonstrate its commitment to rooting out al Qaeda and the violent extremists within its borders. And we will insist that action be taken - one way or another - when we have intelligence about high-level terrorist targets.'

Flanked by Secretary of State Hillary Clinton and Secretary of Defence Robert Gates, President Obama outlined salient features of his new strategy for Afghanistan and Pakistan in a speech broadcast live from the White House.

'To help Pakistan weather the economic crisis, we must continue to work with the IMF, the World Bank and other international partners,' he said.

Mr Obama also urged America's friends and allies to do their part in helping Pakistan rebuild its economy, particularly at the donors conference in Tokyo next month.

He asked the US Congress to pass two bipartisan bills that would not only increase economic assistance to Pakistan but will also deepen America's involvement with that country.

One of them, moved jointly by Senators John Kerry, a Democrat, and Richard Lugar, a Republican, promises $1.5 billion a year over the next five years.

The other seeks to establish the so-called reconstruction opportunity zones or ROZs along the Pak-Afghan border. Goods produced in these zones can be exported duty free to the United States.

'(This is) direct support to the Pakistani people resources that will build schools, roads, and hospitals, and strengthen Pakistan's democracy,' said Mr Obama while supporting the Kerry-Lugar bill.

The president noted that the ROZ bill also enjoyed bipartisan support in Congress and was co-sponsored by Senator Maria Cantwell, a Democrat, Congressman Chris Van Hollen, also a Democrat, and Congressman Peter Hoekstra, a Republican.

The ROZs, he said, will develop the economy of the border region and 'bring hope to places plagued by violence.'

'I do not ask for this support lightly. These are challenging times, and resources are stretched,' said Mr Obama while urging Congress to triple US assistance to Pakistan.

'But ... the security of our two countries is shared. Pakistan's government must be a stronger partner in destroying these safe-havens, and we must isolate al Qaeda from the Pakistani people,' he said.

'The United States has great respect for the Pakistani people. They have a rich history, and have struggled against long odds to sustain their democracy,' said Mr Obama who visited Pakistan twice as a student and has Pakistani friends in the United States.

'The people of Pakistan want the same things that we want: an end to terror, access to basic services, the opportunity to live their dreams, and the security that can only come with the rule of law.'

The president said that the single greatest threat to the future of Pakistan and the United States came from al Qaeda and their extremist allies, and that's why they must stand together in this fight.

'The terrorists within Pakistan's borders are not simply enemies of America or Afghanistan - they are a grave and urgent danger to the people of Pakistan,' he said.

Mr Obama recalled that al Qaeda and other violent extremists had killed several thousand Pakistanis since 9/11, including many Pakistani soldiers and police.

'They assassinated Benazir Bhutto. They have blown up buildings, derailed foreign investment, and threatened the stability of the state,' he said.

Mr Obama asked the American people to understand that Pakistan needs their help in going after al Qaeda because it was not a simple task.

'The tribal regions are vast, rugged, and often ungoverned' and 'the government's ability to destroy these safe-havens is tied to its own strength and security,' said the US president while explaining why he was providing economic assistance to Pakistan.

Mr Obama also stressed the need to reduce tensions between two nuclear-armed neighbours, India and Pakistan. The two countries, he said, 'too often teeter on the edge of escalation and confrontation' and the US must pursue constructive diplomacy with both to lessen these tensions.

Emphasizing the need to work with the people of Pakistan, and not just the government, Mr Obama said: 'To avoid the mistakes of the past, we must make clear that our relationship with Pakistan is grounded in support for Pakistan's democratic institutions and the Pakistani people.'

He also stressed the need for a long-term engagement with Pakistan, saying that the US needs to demonstrate its commitment 'through deeds as well as words; a commitment that is enduring, we must stand for lasting opportunity.'

Drawing a link between the situation in Pakistan and Afghanistan, Mr Obama said that his pledges of economic support to Islamabad were also indispensable to US effort in Afghanistan, which will see no end to violence if insurgents moved freely back and forth across the border.

'Security demands a new sense of shared responsibility. That is why we will launch a standing, trilateral dialogue among the United States, Afghanistan and Pakistan,' he said.

Mr Obama said that the nations will meet regularly, with Secretary Clinton and Secretary Gates leading the US effort.

'Together, we must enhance intelligence sharing and military cooperation along the border, while addressing issues of common concern like trade, energy, and economic development,' he said.

PAKISTAN'S LIQUID FOREIGN RESERVES POSITION

The total liquid foreign reserves held by the country stood at $ 10,257.3 million on 21st March, 2009. The break-up of the foreign reserves position is as under:

i) Foreign reserves held by the State Bank of Pakistan: $ 6,790.8 million.
ii) Net foreign reserves held by banks (other than SBP): $ 3,466.5 million
iii) Total liquid foreign reserves: $ 10,257.3 million